<![CDATA[Managed Futures Trading Company<body>
<h1>Managed Futures Trading</h1>
<p><strong>Many believe the revolutionary change in the public's perception of and participation in stocks can be directly attributed to investors becoming better informed and leaving their investing decisions to market professionals. </strong></p>
<p><strong>Like stocks, investors are being won over to futures by becoming better informed and leaving their investment decisions to professional management. </strong></p>
<p>The purpose of this audio tape is to enlighten, educate, and better inform you about "Understanding The Managed Futures Revolution." Let's begin! </p>
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<p>Studies show that the majority of individuals who trade futures <strong>on their own </strong>do lose. However, there is a logical reason for the amateur losses. If a <strong>non-professional </strong> attempted to practice medicine or law, he or she probably would perform quite poorly, similar to many <strong>non-professional </strong> futures traders. From monitoring amateurs who trade futures <strong>on their own, </strong>we have observed most trade on rumors, tips from friends, gut feelings, part-time research, and for the fun of it. We believe most <strong>amateurs </strong> who trade futures <strong>on their own </strong> are making a very serious error in judgment. They are <strong>not professionals </strong>and, in our opinion, are doomed to fail even before they begin, just like <strong>a non-professional </strong>would be if he or she attempted a complicated medical operation. In most professions, there is a vast difference in performance between <strong>amateurs </strong> and <strong>professionals </strong>. This is especially applicable to futures trading. Doesn't it stand to reason that successful futures trading requires full-time professional preparation, participation, study, focus, and natural aptitude? It should be no surprise that in the highly complex and challenging field of commodity futures trading that the vast majority of <strong>non-professional or amateur </strong> traders do lose. </p>
<p>Studies have shown <strong>professional </strong> Commodity Trading Advisors do experience an <strong>appreciably higher success rate </strong> than the <strong>individual </strong>amateur trader. The fact is, there are numerous Commodity Trading Advisors with highly attractive returns achieved through prudent money management! </p>
<p>While the attractive returns possible through managed futures is one main reason many investors participate, another very important reason for participating in managed futures has its foundation in <strong>Modern Portfolio Theory </strong>. The premise of Modern Portfolio Theory is the risk of an investment can be <strong>reduced </strong> and <strong>performance increased </strong> by holding a number of <strong>uncorrelated investments </strong> in different asset classes, which do not move in lockstep with each other. Professionally managed futures fits this description quite nicely. Futures are a distinct asset class different from securities. In fact, studies have shown <strong>the correlation between commodities and stocks and bonds to be </strong><strong>practically zero, making futures an ideal asset class with which to properly diversify an investment portfolio! </strong></p>
<p><strong>Independent studies and actual experience has shown, futures can increase performance and balance the risk in an overall portfolio. Simply put, futures can potentially be the ideal hedge for stocks and bonds! </strong>These studies were conducted to specifically examine the effect on managed futures in an overall portfolio. </p>
<p>Futures' ability to enhance returns in an overall stock and bond portfolio was <strong>documented </strong> by the prestigious investment banking firm of Goldman Sachs. In a study they conducted covering a twenty-five-year period, they concluded that by allocating only 10% of a securities portfolio to commodities, <strong>investors can vastly improve their performance. </strong> Based on its research, Goldman Sachs recommends that futures be included in their clients' investment portfolios. </p>
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Another study, published by the Chicago Mercantile Exchange, states: "Portfolios with as much as 20% of assets in <strong>managed futures yielded up to 50% more, </strong>with comparable risk, than portfolios of stocks and bonds alone.
<p><strong>Now here's a study which should really open up your eyes. Listen carefully to this: </strong>The prominent Chicago Board of Trade shows in their booklet, “Portfolio Diversification Opportunities,” <strong>a chart indicating a portfolio with the greatest risk and least amount of returns comprised 55% stocks, 45% bonds, and 0% managed futures. Now what was the portfolio which showed the greatest returns and least risk? It was the portfolio comprised of 45% stocks, 35% bonds, and 20% in managed futures. </strong> As you can see, this study supports the one published by the Chicago Mercantile Exchange which concluded portfolios with as much as 20% of its assets in managed futures yielded up to 50% more returns. </p>
<p>Additional evidence of the value of futures in a stock portfolio can be seen when comparing four of the major advances and declines in the S&P 500 with the corresponding futures performances over the past twenty-five years. During <strong>each </strong>advance in the S&P, <strong>futures </strong>were <strong>positive. </strong> However, during all of the <strong>S&P's largest declines, futures </strong> were also <strong>positive. </strong> In fact, in all but one decline in the S&P, the <strong>advance </strong> in futures completely <strong>offset </strong> the loss in the S&P 500! </p>
<p>You can pictorially see these studies in graph form and detailed in Vision's highly informative brochure, <strong><em>Managed Futures, A Balanced Approach. </em></strong> Ask your Vision Introducing Broker for your free copy. </p>
<p>We believe the value of including futures in an overall investment portfolio can be best summed up by the Chief Executive Officer of Harvard Management Company, Jack Meyer, who manages Harvard University's huge pension fund. He was quoted in a November 1996 <em>Wall Street Journal </em> article as saying, "Holding commodities offers <strong>protection </strong>against the ups and downs of stocks and bonds." Referring to commodities, he added, "They're the <strong>most diversifying </strong>asset in the portfolio." </p>
In a December 2, 1996, article in <em>Barron's </em>, the newspaper had the following to say about Harvard Management Company's Chief Executive Officer:
<p>"In the months after arriving from the <strong>Rockefeller </strong>Foundation back in 1990, one of his biggest decisions was to settle on diversification as a key theme. Relying on techniques of <strong>modern portfolio theory </strong> to get the <strong>best </strong>returns with <strong>lowest </strong>level of risk, Harvard needed to cut its exposure to publicly traded U.S. stocks and bonds, and increase its investments in foreign stocks, <strong>commodities, </strong> and private companies. The result: Right now the Harvard endowment has about only half its portfolio in U.S. stocks and bonds, versus about 75% for the typical university endowment." Harvard Management Company's Chief Executive was quoted in the article as saying, "The benefits of diversification are <strong>indisputable. </strong> Diversification rules. It's powerful and our portfolio is a <strong>good deal less risky than the S&P 500." </strong></p>
<p>*Studies have shown that professional CTAs do experience returns greater than the individual investor. Nevertheless, the risk of loss exists in futures trading and past results are not necessarily indicative of future results regardless of who is managing your money. Before investing in any managed futures program, you should carefully review the CTA's disclosure document. </p>
<p>Other examples of the major institutions incorporating managed futures in diversifying their portfolios comes from the city of Detroit and the San Diego retirement systems. </p>
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Detroit's retirement system has been using managed futures in their asset allocation for
<p>11 years. The retirement system's investment analyst, Richard Huddleston, says, “We view managed futures as a legitimate asset class and therefore it belongs in our asset allocation.” The San Diego County Employees Retirement System has 5% of its assets in managed futures. </p>
<p>Many believe, due to practically a zero correlation with stocks, managed futures is the ideal asset class to diversify an investor's portfolio. </p>
<p>We ask, how can any open-minded investor, with all this compelling research on the value of manage futures and documentation as to its attractiveness not see the wisdom of diversifying <strong>at least </strong> a small portion of his or her portfolio with <a href="futurespages/manhtml.html">managed futures</a>? With all this overwhelming evidence, the walls built of misconceptions and myths concerning managed futures are crumbling. Investors are learning the differences between amateur and professional futures traders. They are reading the research and documentation, discussing and confirming the multiple benefits of participating in managed futures. With investors becoming better informed, the false and misleading image of the high rolling commodity trader, as portrayed by the actor Eddie Murphy in the movie “Trading Places,” is being replaced with facts and the realization that performance among many professional CTAs has been highly attractive and, most importantly, achieved through prudent money management! </p>
<p>More and more informed investors are starting to realize professionally managed futures, on its own, as a stand-alone investment can be very attractive. But just as attractive is the fact that managed futures can be the ideal asset class to add profound diversification to a stock and bond portfolio, potentially increasing performance and reducing risk! Please note that regardless of whether you use futures as a standalone investment or to diversify your portfolio, there is substantial risk of loss and you may lose more than your initial investment. With practically a zero correlation to stocks and bonds, according to the definition of Modern Portfolio Theory, managed futures are well suited to diversify an investor's overall portfolio. </p>
<p>You should now better understand why Harvard Management's Myers said of the university's endowment fund “ <strong>Commodities are the most diversifying part!” </strong></p>
<p>It's no wonder participation in professionally managed futures has substantially increased. And for good reason. Not only can Managed Futures be an attractive stand-alone investment, providing the opportunity to capitalize on both bear as well as bull markets, but also, so to speak, just what the doctor ordered to help add profound diversification to an overall portfolio! </p>
<p>The buzz word and main focus of investors today, we believe, is diversification through proper asset allocation In achieving this goal, with practically a zero correlation to stocks, professionally managed futures can prove to be invaluable. </p>
<p>Does your portfolio consist primarily of stocks, bonds, mutual funds, and utilities? If so, you are in direct opposition to Modern Portfolio Theory. You are invested in vehicles which generally move in the same direction! Do you have an investment strategy to protect your portfolio from adverse market reactions? Now, before it's too late, we advise in the strongest of terms to follow the lead of so many other informed investors who are diversifying their portfolios with professionally Managed Futures! </p>
<p>Rest assured, Vision has done its due diligence prior to choosing its recommended CTAs. Among other things, Vision audits each CTA's performance record to confirm its accuracy as presented in each trading advisor's disclosure document. A Vision-affiliated Managed Futures Specialist can help you decide which CTA is best suited for you based on your investment goals and affordability. </p>
<p>We hope we've been informative and provided you with a better "Understanding of the Managed Futures Revolution." Have a great day and the best of luck in your investment endeavors. </p>
<p>*Studies have shown that professional CTAs do experience returns greater than the individual investor. Nevertheless, the risk of loss exists in futures trading and past results are not necessarily indicative of future results regardless of who is managing your money. Before investing in any managed futures program, you should carefully review the CTA's disclosure document. </p>
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